Pro­duc­tion sub­sidy planned atHol­ly­wood event Ri­vals make it a tough year for Nike

China Daily (USA) - - BUSINESS - By REUTERS By BLOOMBERG

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DalianWanda Group plans to un­veil a sub­sidy scheme to at­tract Hol­ly­wood film­mak­ers Niketo Incits newis fi­nally multi­bil­lion­dol­larget­ting scuffed up. stu­dio in the east­ern Chi­ne­seOne of the city long­standin­gof Qing­dao, dar­lings a per­sonof with­Wall di­rect Street knowl­edge— praised fo­rof theits plan ad­ver­tis­ing­said. clout and pro­duc­tThe chair­man in­no­va­tionof the— has prop­erty-to-en­ter­tain­men­thad a rough year. The shares con­glom­er­ate,are down 13 Wang per­cent Jian­lin,in 2016 as is an­a­lysts ex­pected andto un­veil in­vestors the fret scheme,over mar­ket-sharewhich of­fers lossesto sub­si­dizeto Adi­das 40 AG per­centand Un­derof pro­duc­tion Ar­mour costs,Inc in at thean event United hosted States,in Losits An­ge­leslargest re­gion. onMon­day evening.

NikeThe had sub­sidy been will rollingbe jointlysince the funded re­ces­sion­with the— even lo­cal in Qing­daothe face gov­ern­ment,of chal­lenges said from the Adi­das per­son, and who Un­der asked Ar­mour not — to with be the iden­ti­fied.stock av­er­ag­ing an­nual gains The of sub­sidy26 per­centwill ap­ply over to the fea­ture past sev­en­films and years. tele­vi­sionBut 2016 shows.has been Costs a el­i­gi­ble dif­fer­ent for story,the re­bate­with its in­clude shares stage sinkingand equip­men­twhile the broad­er­rentals, set mar­ket con­struc­tion­hits record and highs.lo­cal ac­com­mo­da­tion.On one flank, Un­der Ar­mourA Wan­da­has at­tacked spokesman­its lu­cra­tive de­clined bas­ket­ball-shoeto com­ment. busi­ness with A the Qing­dao suc­cess of gov­ern­men­tits Stephen Curry spokesman­line. On said the he other, was Adi­das not fa­mil­iarhas drawn­with the away plans. some of its ca­sual Wanda’s busi­ness bil­lion­aireby team­ing chair­man up withis build­in­grap­per a Kanye foot­print West in and Hol­ly­wood rein­vig­o­rat­ing through retroa series styles of like deals, Su­per­star.part of China’sThe Ger­man grow­ing com­pany in­vest­ment also in has the taken US a en­ter­tain­ment­page from the Nike in­dus­try. play­book and turnedThe Boost, com­pa­nya per­for­mance­has bought run­ning-shoe line, into a mon­ster life­style hit.

“There is more com­pe­ti­tion from brands that didn’t have the ca­chet they do now,” said Chen Grazutis, an an­a­lyst at Bloomberg In­tel­li­gence. The ri­vals Juras­sicWorld­have also hurt pro­ducer Nike’s abil­ity Leg­endary to charge En­ter­tain­ment­premium prices, and prompt­ingUS cin­ema chainit to AMC of­fer En­ter­tain­mentsome items for less, Hold­ings.he said. Wanda also Ex­ac­er­bat­ingsigned a mar­ket­ingNike’s strug­gles and co­fi­nancingis shop­pers’ deal in­creas­ing­with Sony pref­er­encePic­tures, a for unit clas­si­cof Ja­pan’sand ca­sual styles over per­for­mance prod­ucts de­signed for ac­tual ath­letic use, ac­cord­ing to Matt Pow­ell, an an­a­lyst for re­searcher NPD Group.

For sev­eral years, the en­tire run­ning-shoe in­dus­try was helpedSony Corp.by peo­ple who bought high-techWith the run­ning Qing­dao shoes stu­dio, for ev­ery­dayWanda will wear, be not com­pet­ingto train for half with marathons.dozens of US Now states those­and con­sumer­scoun­tries in­cludin­gare turn­ing Bri­tain to ca­su­a­land New sneak­ers Zealand like that Adi­das’shave Stan lured Smith film­mak­er­sline. That out shiftof Hol­ly­wood not only helps Nike’s cur­rent largest ad­ver­sary, but also threat­ens to sad­dle Nike with new ri­vals such as ca­sual-footwear mak­ers, in­clud­ing Steve Mad­den Ltd, that don’t even have per­for­mance busi­nesses, Pow­ell said. with tax in­cen­tives and “It re­bates.lets brands that don’t have In­cen­tivesa per­for­mance typ­i­cally strat­e­gy­range fromin the 15 door,” per­cent Pow­ell to said. 45 per­cent Of of ut­most cer­tain in­ter­est pro­duc­tion to costs, in­vestors ac­cord­ing­will be howto Nike­tax in­cen­tive per­forms in spe­cial­ists,North Amer­ica.mak­ing Through­out a tur­bu­lent pe­riod in China and slow­downs in Europe, Nike’s home base has re­as­sured in­vestors of its dom­i­nance. The com­pany in­creased an­nual sales 10 per­cent or more from fis­cal years 2011 to 2015. But growth slowed to 7.4 per­cent in the fis­cal year through May.

Shoe re­tailer Fin­ish Line Inc only added to doubts about Nike’s home mar­ket when it re­ported sec­ond-quar­ter re­sults by the end of last month. The US-based chain said sales of Nike’s pre­mium bas­ket­ball shoes fell in the pe­riod, and CEO Sam Sato sang the praises of Nike’s com­pe­ti­tion. He called the per­for­mance of Un­der Ar­mour’s lat­est Curry shoes “tremen­dous” and said Adi­das re­mained “on fire.”

Re­search and dis­cus­sions with in­dus­try sources “point to Adi­das and Un­der Ar­mour con­tin­u­ing to gain share at Nike’s ex­pense,” Lyon said in the note. He cut his 12-month price tar­get on the stock to $52 from Wanda’s$56. sub­sidy among the “Our world’s con­cerns high­est. on Nike are mount­ing,”The Qing­dao Lyon stu­dio­said. “His­to­ryis part of hasa large shown theme that park brand and shift­sreal es­tate­take a de­vel­op­ment­long time to ma­te­ri­al­ize,de­signed to and be­come sim­i­larlya Chi­ne­sea long ver­sion­time to ofHol­ly­wood.re­vert back.”

CHINA DAILY REUTERS WANG GUODAN / FOR

Adi­das AG’s ad­ver­tis­ing bill­board stands to­gether with a Nike Inc store in Bei­jing. Ac­tress Ni­cole Kid­man shakes hands with fans at a red car­pet event pro­mot­ing Wanda Group's Ori­en­tal Movie Me­trop­o­lis project in Qing­dao, Shan­dong prov­ince, in this file photo.

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